The Dutch banks ABN AMRO,
ING Bank and NIBC, together with the Scandinavian SEB and DNB, have announced
that they are introducing responsible ship recycling standards (RSRS) for their
ship financing.
The Norwegian fund, KLP,
which commissioned a report by the International Law and Policy Institute on
shipbreaking in 2016, has already taken a stance to reject beaching practices.
A collective move to include
ship recycling conditions on loans by leading banks and financial institutions
with large shipping portfolios is a positive step to imposing responsible
practices on shipowners, says NGO Shipbreaking Platform. Shipowners, rather
than finding crafty loopholes in the law, will feel the bite if they do not
choose to recycle responsibly off the beach, says the Platform.
Dr Nikos Mikelis,
Non-executive Director of cash buyer GMS, says the announcement by the three
banks to enforce responsible ship recycling standards should be, or should have
been, a welcomed development. In the last two years 28 yards in India have
achieved Statements of Compliance with Hong Kong Convention by IACS class
societies and 24 more yards are currently in the process of gaining Statements
of Compliance. Furthermore, there are promising signs that yards in Bangladesh
are preparing to meet the new IMO standards.
To keep this momentum, an
increasing numbers of shipowners will have to demand responsible recycling for
their ships, says Mikelis, this way leading more and more yards to invest in
improvements. It therefore follows that support for responsible recycling by
the banking sector will be invaluable in bringing forward the day that all ship
recycling is done in a safer and cleaner manner, according to the new
international standard.
The initiative of the banks
is detailed in the RSRS where the three banks commit themselves to implementing
this standard and to promoting it within the financial sector. Section 4 of
RSRS contains eight requirements that participating banks should make their
best efforts [to satisfy].
“Here I see one specific
requirement, namely that the bank will require that any ship it (re)finances
should be provided with an Inventory of Hazardous Materials (IHM) by the
shipowner,” says Mikelis. “The remaining requirements of the standard appear to
be 'nice' but not specific.”
In its last section RSRS
details its “Guidance for Loan Agreements” where it provides “language that can
be included in loan agreements” and which “should not be viewed as a required
legal framework but as suggested wording to assist banks in incorporating the
ship recycling standards in their loan agreements.”
“Here in addition to the
requirement to provide and maintain the IHM (the document mistakenly refers to
a “Green Passport” which was the precursor to the IHM, until 2005), the
Borrower is required to ensure that the vessel shall be recycled in accordance
with the E.U. Ship Recycling Regulation,” says Mikelis.
“Shipowners should be very
careful in understanding the implications of contractually agreeing with their
lender to recycle a ship in accordance with the E.U. Ship Recycling Regulation.
The European Commission, who will implement the new regulation (on European
flagged ships), has still not published the list of approved yards outside E.U.
“Furthermore, for the last
three years the Commission has shown inordinate support for the extreme views
of the NGO Platform (banning of beaching and therefore of recycling in South
Asia) and characteristically keeps funding more than half of the NGO’s budget.
We can hope that the Commission will recognize the tremendous improvements that
have been taking place in India and also will be cognizant of the tremendous
push Europe will give to responsible recycling by approving deserving yards in
South Asia.
“Nevertheless, I guess that
it is not safe to assume that sense will prevail over Brussels’ politics, in
which case the E.U. Ship Recycling Regulation may ignore South Asia, the
improvement in many of its yards and the fact that in 2016 the three South
Asian countries recycled 84.1 percent of the tonnage recycled worldwide (World
Casualty Statistics 2016 by IHS Global).
“Whereas the RSRS document
by the banks does not address banning of beaching or recycling in South Asia,
the banks’ press release quotes the NGO Platform who welcomes the leading role
taken by the banks to ensure a departure from the unnecessarily dirty and
dangerous practice of beaching. Shipowners should start getting very worried in
case these three, and possibly more banks, as well as the European Commission,
end up sharing the same dangerous lack of vision as the NGO Platform.”
Source: maritime-executive.
31 May 2017
